One would think that hedge managers would get rewarded or penalized for performance or the lack thereof, but apparently this isn’t so. By all accounts 2014 was an awful year for hedge funds, the worst since 2011, with average returns of just 2%, according to Bloomberg, but the Daily News reports that most hedge fund managers aren’t suffering.
Ray Dalio of Bridgewater, the worlds largest hedge fund with $100 billion in assets, has a net worth of $15.2, even though the fund returns only 3 to 8 percent. Two of John Paulson’s funds shed 17% to 22%, but he is still sitting on $13.7 billion. Paul Singer’s Elliott Management has only returned $1.9 billion since its inception in 1977, but the slower returns in 2014 are understandable, since he is still in a battle with Argentina over unpaid debt.
Although he is often criticized for his exceedingly aggressive tactics as an activist investor, Bill Ackman at least made a strong return for his shareholders as well as cashing in himself in 2014. His Pershing Square fund gained 37%, Ackman’s total net worth is $2.7 billion, and he is now the richest hedge fund manager his age, 48.
Ackman made a lot of money by pushing for the takeover of Botox maker Allergan, and wants to do similar deals in the future. He has hired veteran merger lawyer, Stephen Fraidin, partner at Kirkland & Ellis, to join Pershing as vice chairman. Fraidin and Ackman have been acquainted for years, and Fraidin, age 75, has been a lawyer on Wall Street for 50 years. Recently, he was an adviser on the takeover of H.J Heinz and on the controversial merger between Burger King and Tim Hortons. “I’ve had a wonderful 12 years at Kirkland, ” said Mr. Fraidin, “I’m looking forward to working with Bill and helping him accomplish even more outstanding success.”